Rebar futures on the Shanghai Futures Exchange closed up 1.68% at 4,060 yuan per tonne, well off the high of 4,194 yuan struck in early trade.

Iron ore futures in Dalian suffered an even sharper reversal, closing down 2.08% at 565.5 yuan per tonne having briefly traded at 598 yuan earlier in the session.

Coking coal and coke futures also weakened, losing 3.2% apiece.

Analysts put the divergence between rebar and bulk commodity contracts on Monday down to concerns that regulators would look to curb steel production further in the months ahead following a major fire at a steel mill in China.

The furnace fire at a mill operated by Benxi Iron and Steel Group raised concerns among analysts that the incident could trigger stricter safety inspections at mills, bringing production halts and intensifying a supply shortage, Reuters said.

Chinese regulators have already announced strict steel production curbs in an attempt to improve air quality during winter.

Analysts at ANZ said the weakness in iron ore may have also been due to three listed Chinese steel mills issuing warnings about the rising raw material prices impacting profitability.

However, after reversing hard during Monday’s day session, rebar and iron ore contracts managed to eke out small gains in overnight trade, providing an early indication that the steep declines across iron ore spot markets may not continue today.